Indian government bond yields fell in early trading on Friday, with the 10-year benchmark yield around the significant 6.50% level as the market awaited the auction of a new 10-year security for further direction.
The yield on the 10-year benchmark note was at 6.5078% as of 10:15 a.m. IST, a decrease from Wednesday’s close of 6.5166%. The Indian debt markets were closed on Thursday for a public holiday.
The Indian government plans to auction a new 10-year government bond later in the day to raise approximately $3.61 billion, following an increase in the share of the 10-year bond in its borrowing strategy for the October-March period.
“A new 10-year issue at the start of the quarter will establish the tone for overall demand and supply dynamics, and it is crucial that the cutoff remains below 6.50%,” a trader with a primary dealership commented.
Bond yields decreased in the previous session after the Reserve Bank of India (RBI) maintained its policy rate at 5.50%, as anticipated, while noting that low inflation has provided room for supporting economic growth. The central bank has revised its growth forecast for the financial year upwards by 30 basis points to 6.8% and lowered its inflation forecast by 50 basis points to 2.6%.
RBI Governor Sanjay Malhotra indicated that current uncertainties regarding tariffs and trade policies would likely impact external demand.
Many market participants are now predicting a rate cut in December following a pause in both August and October. The RBI has reduced rates by 100 basis points since the beginning of the year.
In the overnight index swaps (OIS) market, rates eased on Friday as the market showed increased confidence regarding a potential rate cut in December. The one-year OIS rate was recorded at 5.4150%, while the two-year OIS rate was at 5.3950%. The five-year OIS rate was trading at 5.6550%.
Published on October 3, 2025.
